If the Federal Government Is Running a Budget Surplus

question 109

Multiple Choice

If the federal government is running a budget surplus,

• A) its expenditures must be greater than its revenues.
• B) the supply of money will decline.
• C) it will be able to reduce its outstanding debt.
• D) the U.S. Treasury will have to borrow additional funds in order to cover the surplus.

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Definitions:

Market Power

The ability of a firm or group of firms to manipulate the price of a good or service in the market by controlling supply, demand, or both.

Long-run Equilibrium

A state in which all factors of production are fully adjusted to the economic conditions, and all inputs and outputs are at their optimal levels without any external pressures.

Monopolistically Competitive

A market structure where many firms sell products that are similar but not identical, allowing for significant differentiation and competition.

Monopolistic Competition

A market structure characterized by many firms selling products that are substitutes but differentiated from each other (e.g., through branding), leading to non-price competition.